Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
New ETF: Muni Bond Funds for CA (and NY)
Old 11-15-2007, 10:29 AM   #1
Recycles dryer sheets
 
Join Date: Feb 2007
Posts: 62
New ETF: Muni Bond Funds for CA (and NY)

I know I need more bonds in my portfolio. And since I'm buying in my taxable account, I wanted to get California municipal bonds to decrease my state taxes.

Several weeks ago this ETF showed up: CMF - iShares California Muni
Any thoughts on this? Buying individual bonds always seemed smarter to me as it eliminates the expense ratio that's built into bond funds (and ETFs). And even though it's kind of small here - .25% - the return is smaller too, so it's proportionally something that would grow kind of big if held for several years and eat into my returns.

Any thoughts on this product? I'm in my late 30s, living in CA for at least a few more years and other than some TIPs, I have almost no bonds, and too much cash on hand
__________________

__________________
tricky88 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-15-2007, 02:40 PM   #2
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
The thing to remember about state-specific muni bonds is that the securities are usually priced such that they are only better than taxable bonds for taxpayers in the maximum brackets. For example, if the maximum combined fed/state tax rate was 40% in some state and taxable bonds of similar quality and maturity were yielding 6%, munis would probably yield little more than 3.60% (60% of 6%). If the deal got much better than that, those in the highest brackets would buy more and drive their yields down.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 11-15-2007, 03:40 PM   #3
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
I don't really see the advantage of the CA muni ETF's over Vanguard's cheaper muni funds [like VCITX or VCAIX]. Vanguard's funds hold many, many more bonds [more diversification], have no purchase fees [commissions, bid/ask] if purchased directly from Vanguard, and once you hit $100,000 in the fund, you pay even less in expenses.

Beware buying individual munis. Many of them are extremely illiquid. See also Muni bond funds and ind bonds, The dark side of the muni, and Vanguard's tax equivalent calculator.

- Alec
__________________
ats5g is offline   Reply With Quote
Old 11-15-2007, 11:41 PM   #4
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 831
Quote:
Originally Posted by ats5g View Post
I don't really see the advantage of the CA muni ETF's over Vanguard's cheaper muni funds [like VCITX or VCAIX]. Vanguard's funds hold many, many more bonds [more diversification], have no purchase fees [commissions, bid/ask] if purchased directly from Vanguard, and once you hit $100,000 in the fund, you pay even less in expenses.

Beware buying individual munis. Many of them are extremely illiquid. See also Muni bond funds and ind bonds, The dark side of the muni, and Vanguard's tax equivalent calculator.

- Alec
Vanguard is usually good.

Also check out Nuveen closed end muni state funds:

Closed End Funds :: Our Product Line :: Municipal Bond Closed End Funds

If you play your cards right, you might be able to buy them at discount to NAV.
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Muni Bond ETFs ats5g FIRE and Money 1 09-14-2007 08:43 PM
Muni Funds- Some help are needed BA FIRE and Money 0 10-07-2006 12:16 PM
Proposed law may change muni bond taxes wildcat FIRE and Money 2 09-10-2006 06:52 PM
Municipal Bond ETF? haha FIRE and Money 9 06-06-2006 06:52 AM
Hold regular bond in 401k or muni in taxable? soupcxan FIRE and Money 9 04-07-2005 05:54 PM

 

 
All times are GMT -6. The time now is 02:13 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.